Follow the Money in Castro Valley

Incorporation supporters are tired of sending their dollars out of town. Opponents worry about the out-of-town dollars coming their way.

Proponents of Castro Valley's Measure Q, which would turn the hillside suburb of 58,000 people into a genuine city, say incorporation will bestow self-determination upon residents of the East Bay's most populous unincorporated area. They tout the measure as a move forward for Castro Valley's economic freedom from Alameda County, which annually extracts $10.52 more in taxes from the average resident than it returns in services.

But for all the apparently genuine talk of local control, the Castro Valley cityhood campaign is largely bankrolled by donors from out of town -- and even out of state. The campaign for Measure Q, which has raised more than three times as much money as the measure's opponents, includes cash from a San Leandro law firm, a Texas waste management company, Hayward and Pleasanton developers, and Sacramento-based Sutter Health, which owns Castro Valley's Eden Medical Center.

Opponents of incorporation warn that Castro Valley risks being obligated to outside businesses interested in securing contracts with a fledgling city that will need, among other things, legal services and garbage disposal. They argue that since Castro Valley already has a weak sales tax base -- the area rakes in only slightly more than $40 in annual sales taxes per resident, while nearby San Leandro and Hayward make more than six times that -- the newly incorporated city would be under immediate pressure to build new housing to boost the tax base. And they think developers from neighboring cities are hungrily eyeing currently undeveloped swatches of hillside such as the Five Canyons area, where development is prohibited by county law -- as long as the land remains unincorporated.

Steve Dimick, chairman of the Castro Valley Inc. Yes! Campaign, says that while the pro-incorporation team is willing to take money from "almost anybody," the cash won't make the new city beholden to special interests because it isn't going straight to individual candidates. "If they were donating to a candidate that stood to pay them back something if elected, then there might be a point to pointing to these out-of-town donors," Dimick says. "If they're donating to a campaign, none of whose members are running for anything, I don't see what they stand to gain."

Plans for incorporating Castro Valley have been kicked around for half a century, although the last time it went to a public vote was in 1956. This time, after several recent campaigns failed to gather enough signatures to qualify for the ballot, Measure Q was placed on the ballot by the county after an audit by fiscal consultants who agreed that Castro Valley could survive independently -- although critics are quick to point out that it took three tries before county number-crunchers declared incorporation to be economically feasible.

To ensure that the new city would have incoming revenue streams even without a sturdy retail base, Measure Q's passage would also be dependent on the approval of two other November measures, which would okay a ten percent hotel tax and make permanent a utility tax that is otherwise expected to sunset in 2009.

Measure Q's opponents say the whole thing is based on fuzzy math. Even the most optimistic budget estimate shows that Castro Valley would operate close to the edge of bankruptcy, they say, with a tiny surplus sure to evaporate if California's budget deficit forces cutbacks in the funds disbursed to cities, or if area hotels don't get enough visitors. "Castro Valley doesn't have the business or industrial base to support a city," says Glenn Carlson, president of the group formed in opposition to the measure. "There's no PeopleSoft, no Costco, no Bishop Ranch." Measure Q's opponents worry that cityhood would be expensive for residents because the new government may try to raise revenues by jacking up fees and fines, cutting back on city services, or speeding up the process of housing development.

But supporters say the status quo is downright undemocratic. Although Castro Valley residents are represented on the county level by Supervisor Nate Miley, they make up only one-fifth of his constituents -- far too few to sway his vote. "We essentially have no voice," says Dimick. "We cannot elect or defeat our supervisor. He has to get two other board members on his side in order to get anything passed involving Castro Valley. If you go to a meeting and there's a Castro Valley item on the agenda, it might be #66. Consequently, we don't have any say in where our tax money goes."

Which is to say, it's out-of-town money if incorporation succeeds, and different out-of-town money if it fails.

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